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The brokerage firm HDFC Securities has given an eye on the power sector and has picked up Borosil Renewable with an 'Add' rating, NTPC with a buy rating, Tata Power with a reduce rating, and JSW Energy with a sell rating, believing that India will add 342GW of RES capacity between FY22 and FY30, led by solar +280GW, representing a capex potential of INR11.2 trillion.
| Company | Recommendation | Target Price | Upside (%) |
| Borosil Renewable | Add | 704 | 9.0% |
| NTPC | Buy | 174 | 12.1% |
| Tata Power | Reduce | 231 | -0.9% |
| JSW Energy | Sell | 160 | -51.5% |
HDFC Securities has said in a note that “Renewables are poised to play a huge role in India’s energy sector, with capacity increasing fourfold by 2030, aided by stringent Renewable Power Obligation (RPO) standards, decarbonisation efforts, and increasing power demand. However, the success of RES will require the penetration of hybrid structures (rather than plain vanilla tenders) along with viable storage systems to ensure peak power requirement and grid stability. Another major leap that India and other global economies are pursuing is green hydrogen, which will replace the conventional pollutant fuel in the fertilizer, ammonia, steel, marine, refinery and heavy vehicle industries but not in the passenger vehicle segment."
The brokerage has said India would require ~21GW of electrolyser capacity by FY30 to meet it’s anticipated ~4MT of green hydrogen demand, which will be powered by ~80GW of RES capacity. The RES growth would require ~INR20 trillion of funding over the next decade.
“In our view, NTPC (BUY), Borosil Renewables (ADD) and Tata Power (REDUCE) will be key listed beneficiaries and should be considered for long-term investment play," HDFC Securities has said.
“We expect India will add ~342GW of RES capacity over FY22-FY30, led by solar +280GW which represents a capex opportunity of INR11.2 trillion (debt funding of INR9.0trillion). Higher RPO obligation of 40% (vs 20% now), which would push discoms to sign renewable PPAs. The bankability would improve with hybrid projects as it ensures RTC power. Companies with a large portfolio of hybrid and storage facilities will attract better valuations," the report of the brokerage says.
The brokerage has further claimed that “We expect that the mega transition from grey to green energy, along with favourable policies, will provide a strong impetus to domestic manufacturers to make RES a sustainable and competitive industry. Further, the viability of storage and green hydrogen will play a key role in the success and mass-scale adoption of RES energy in the system. However, any failure or delay in lowering storage costs or finding another viable alternative could significantly derail the country’s renewable adoption program."
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
